With union fees ruling, SCOTUS may become a champion of free-riders

The Supreme Court heard oral argument Feb. 26 in Janus v. AFSCME Council 31, and a polarizing argument it was. Janus works for the state of Illinois and doesn't want to pay mandatory union dues.

The issue is whether his First-Amendment rights are violated when the public-sector collective bargaining agreement includes an agency-fee clause (some call it a fair-share clause) requiring all employees of the unit to pay union dues. (No state requires a worker to involuntarily join a union, as opposed to merely paying dues.)

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The court heard argument on the same issue two years ago, but Justice Scalia died before the court issued its decision, and the other justices split 4-4. That would make Justice Gorsuch the swing vote. He asked no questions at argument and so did not tip his hand, but most prognosticators predict he will side with the four conservative justices and strike down agency fees.

Forty years ago, in Abood v. Detroit Board of Education, the Supreme Court held that public-sector agency fees were constitutional to the extent the fees covered the costs of collective bargaining and grievance arbitration, but not for lobbying or other political activities that did not directly benefit all workers.

Much litigation has fought over the line between permissible and impermissible costs, opt-ins versus opt-outs and other details. But until now, Abood was the framework. The question presented is whether the court should overrule Abood.

The employee Janus claims he is a "forced rider," forced to subsidize a union even though he disagrees with the union's bargaining goals. This is compelled speech about issues of public concern, his argument continues, because wages, conditions and all the other issues in public-sector bargaining are matters of public concern.

The First Amendment protects his freedom to speak out as he wishes on matters of public concern, his argument concludes, or in this case, protects his freedom not to have his money support public causes with which he disagrees.

The union and government employer respond that Janus is trying to be a “free rider,” obtaining the benefits of union representation without paying his fair share of the costs. While some workers may disagree with the union’s goals, many others fully support the union’s goals of higher wages and better benefits but still hope to free-ride by having others rather than themselves pay the union dues.

Suggestive evidence that many workers support their union but are free-riders comes from recent elections in Iowa (a right-to-work state that bans agency-shop fees), where over 80 percent voted to recertify the union but fewer than 30 percent pay the (voluntary) union fees.

For full disclosure, I should note that I participated in an amicus brief of economists and professors of law and economics in the Janus case, where we attempted to explain to the court that the free-rider problem is a long-recognized concept in economics.

Unchecked free-riders create a suboptimal supply of a collective good, be it national defense, highways, vaccinations or union representation. Classical economists David Hume and John Stuart Mill explicitly discussed the free-rider problem.

James Madison and Alexander Hamilton viewed the failure to deal with free riders as the central weakness of the Articles of Confederation. Mancur Olson gives the classic modern discussion of the free-rider problem, in "The Logic of Collective Action" (1971).

Libertarian economists Milton Friedman and Thomas Sowell are among the many economists who recognize that without central regulation, free riders create inefficiencies.

Undoubtedly, there are pros and cons to agency fees. Whether a state legislature should allow them in public-sector collective bargaining and whether a state or local government agency should agree to the clause at the bargaining table is a complex matter of public policy.

Some 21 states currently allow government negotiators to agree to agency fees, with the remaining state legislatures forbid mandatory fees.

The fact that states are about 50/50 on allowing agency fees itself suggests the balance of public policies is complex. I’m not sure how I would vote as a state legislator on this public-policy question — and it might depend on which state I was a legislator in.

But it strikes me as simply amazing that the First Amendment controls the issues here. First, internal human-resources issues within government agencies are generally viewed as not being matters of public concern worthy of constitutional protection, as the Supreme Court has said in Connick v. Myers and many related cases.

Second, we are not talking about direct speech here, but merely whether Janus and other self-avowed forced riders must pay dues. All taxpayers can sympathize that the government often uses our money for causes we don’t believe in, but that doesn’t give us a First Amendment right not to pay taxes.

In my view, the question of agency fees should remain a matter of state policy. The Constitution neither mandates nor forbids them. Importantly, whenever agency fees exist, the legislature has allowed them, and the government employer as well as the union has agreed to them.

But if the plaintiffs win this case, the policy discussion is over. The court will have held the Constitution forbids agency-shop fees in public-sector employment. Those 21 fair-share states will have to get in line. Free riders of the world unite! The Supreme Court is your champion.

Stewart J. Schwab is the Jonathan and Ruby Zhu Professor of Law at Cornell Law School. Professor Schwab is a leading scholar in economic analysis of law and in employment law.